ONS re-classification and its wider impact

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This article contains information of general interest about current legal issues and is not intended to apply to specific circumstances. It should not, therefore, be regarded as constituting legal advice.  If you need legal advice on a specific issue we recommend you consult a legal practioner.

Will the Office for National Statistics (ONS) re-classification of Registered Providers of Social Housing (RPs) as public bodies have an impact on those bodies' wider obligations?


What has changed?

The ONS is responsible for assigning accounting classifications to organisations for accounting purposes.   On 30 October 2015 the ONS re-classified RPs as "Public Non-Financial Corporations", rather than Private Non-Financial Corporations" as they had been previously. This was backdated to the enactment of the Housing and Regeneration Act 2008. This means that RPs are now classified as public bodies for national accounting purposes. The main consequence of this is that some £60bn (current RP borrowings) has been added to the government's balance sheet as public sector debt.

Will this have a wider impact on RPs?

Whether an organisation is considered a "public body" for any of other purposes is determined by the tests that have been developed within each area of law.  The government has sought to reassure RPs that the re-classification is purely statistical and makes no material difference to the operation of housing associations.

The question of whether specific functions of RPs are "public" is a matter for the courts to decide, applying established principles. The ONS re-classification has the potential to be used as an argument in favour of those functions being found to be public, but this will still depend very much on the function in question.

Human Rights and Judicial Review

v  The Human Rights Act 1998 ("HRA") makes it unlawful for a "public authority" to act in a way that is incompatible with a Convention (human) right.  The definition of "public authorities" is the subject of a large body of case law, and it is possible for the same organisation to be a public authority in respect of some of its functions, but not for others.

v  Judicial review only applies to decisions of "public law bodies" carrying out "public law functions". As with the HRA, it is possible for some of an organisation's functions to be amenable to judicial review, while others are not.

v  The position established in the case of Weaver v London & Quadrant is that RPs are considered to be "public authorities" for the purposes of the HRA when they terminate a social tenancy. RPs would also be considered "public law bodies" for the purposes of judicial review in respect of that function. It is possible that the ONS re-classification could lend some support to an argument that RPs are public bodies in respect of all of their functions, but in our view it is a factor that would be given relatively little weight. The courts are likely to continue to adopt a function-by-function analysis, applying the tests as they have been developed in human rights and judicial review case law.

Equality Act, Freedom of Information Act 2000 (FOIA) and the Public Contracts Regulations

v  RPs are already subject to the anti-discrimination provisions of the Equality Act. As bodies they do not fall within the scope of the public sector equality duty ("PSED"). However in relation to certain functions there is scope for RPs to be bound by the PSED. The ONS re-classification, as with HRA and JR, will be one factor the courts will consider when applying the test of whether a particular function is "public" (and therefore subject to the PSED).  

v  The ONS re-classification is not anticipated to have any immediate effect on the current status of RPs as regards FOIA or public procurement regime under the Public Contracts Regulations.

In conclusion, there is no immediate, direct impact on RPs other than for purely accounting purposes. Re-classification does provide some support to the argument that RPs are public bodies for all purposes, but it will be a factor of relatively limited significance compared to the well-established principles developed in the case law relating to the areas listed above. RPs would be well advised to keep up-to-date on any case law developments in this area.  

 Further reading

v  The ONS Brief Introduction to Classification Decisions  - http://www.ons.gov.uk/ons/guide-method/classifications/na-classifications/brief-introduction-to-classification-decisions/index.html

 v  The ONS' re-classification announcement  - http://www.ons.gov.uk/ons/rel/na-classification/national-accounts-sector-classification/classification-update---october-2015/index.html

 v  Article on the potential impact of the re-classification on RPs' ability to borrow and merge - http://www.housing.org.uk/blog/reclassification-could-have-profound-consequences-for-housing-associations/

 v  Written statement by the Secretary of State for Communities and Local Government, 2 November 2015 - http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2015-11-02/HCWS281/